Week going ahead

Welcome to the Weekly update on the Indian Financial and Capital markets:

1. The leading indices failed to sustain a weekly close above the previous swing high of 10,137. A divergence was seen between the frontline 2 indices where Nifty only went ahead to make fresh new all time highs whereas the Sensex failed to breach its previous swing high level. On Friday the Nifty and the Bank Nifty both made a Bearish engulfing candle on both daily and weekly time frames which is considered very bearish in technical terms. More information on Bearish Engulfing candle can be found on the below mentioned link: http://www.investopedia.com/terms/b/bearishengulfingp.asp

Going ahead more pain can be witnessed on the frontline indices and in the mid cap and small cap spaces. A breach of the previous swing low of 9688 can take the Nifty to even lower levels between the range of 9440-9460.

2.       Crude Update – Crude has given a break out above it’s previous swing high of $50.41 and is on course to find resistance at the $52 mark.

3.       Forex – For the week INR closed at Rs. 64.7877 against the Dollar($) depreciating 1.05% for the week and Rs. 77.3530 against the Euro depreciating 0.92% for the week. The Rupee technically looks to weaken further and reach immediate levels of 65.4025 in the immediate short term. In our previous articles, 76.9908 level was constantly mentioned as a tough resistance where the currency pair took stiff resistance and retraced, however in the previous week the EURINR has broken out of 2.5yr range and is poised to depreciate further in the medium term going ahead with 79.30 can be seen as the immediate next target.

4.       FII Fund Activity vs DII Inflows (SIP’s) – There has been widespread media articles of heavy FII (Foreign Institutional Investors) outflow that shall begin on account of Fed Fund Rates hike which is expected in December of this year taking the total rate hikes for the year to 3 against its original 4 set out in November of last year. The actual reality is that the Indian Capital markets have been witnessing FII outflows since early March of this year despite the markets going on to make new all time highs on the Nifty and the Sensex. The current Bull Run has been on account of strong domestic institutional support via the SIP route that is being pumped into the markets at every correction. Since March, 2017 FII’s have dumped just under 50% of their total holdings from a level of 80,000crs to presently 43,500crs. One can view the same depicted below. It is interesting to note that for the first time in the history of the Indian Capital markets the DII’s (Domestic Institutional Investors) have been able to match and at times overpower Foreign Outflows from the country. Over the period of April 17 – August 17 the DII’s have been fuelled by a whopping Rs. 23750crs through the SIP route.